Guyana will be responsible for paying for oil spill damages if there is no clear statement of responsibility
The British Petroleum (BP) oil spill occurred in April 2010 in the Gulf of Mexico, 46 miles off the coast of Louisiana in the United States of America with monumental disastrous effects that exceeded a monetary settlement amount of $65 B U.S dollars paid to American families in compensation for damages suffered. This is not even taking into account the environmental damage and loss of lives human (11 employees died in the explosion with 17 injured), marine and birds. Guyana receives miniscule revenues from its oil that is owned by the citizens of Guyana due to a hastily agreed and lopsided contract signed on June 27th, 2016 relative to what other nations such as United Arab Emirates, Qatar, Kuwait, Saudi Arabia etc. earns from its ‘black gold’.
If a comparable oil explosion resulting in a spill were to occur on Guyanese oil producing platforms, depending on its severity, the strength of sea and wind currents, the results would be catastrophic and the state of Guyana as we know it will simply cease to exist. The consequences will be harsh, direct and immediate. The Guyanese currency will be immediately devalued, basic services in Guyana such as electricity, water, transportation and food will increase astronomically in cost as the currency of one’s country is dependent on the balance of payments surplus or deficit and the consequential demand. Future generations will be burdened with an onerous debt with no ability to repay.
Depending on the extent, severity and potential cost of a disaster, the oil companies will simply worm themselves out of liability in the absence of any specific document, clause or provisions specifying directly in plain simple language who bears the costs to compensate affected parties as litigants on the basis of claims will quickly move to regional and international courts. The burden will subsequently be transferred to the owners of the resource, the people of Guyana. Emigration will take place on an unimaginable scale and the hardships for Guyanese families will simply quadruple compared to current living standards with the increase in crime having a direct correlation to increasing levels of poverty.
Guyana as a relatively small nation (population 0.75M) given its current GDP and real per capita income (approx. $5,000.00 U.S) minus the inflated value of oil extracted and sold will be unable to meet its debt obligation for generations to come. The country will literally shut down as international credit institutions such as the International Monetary Fund (IMF) will impose draconian measures and conditions that undoubtedly will catapult Guyana beyond bankruptcy. As a former colony of Great Britain, British Guiana acquiring its independence in May
1966, a mere 6 decades ago, emerging out of a history of human exploitation of slavery and indentureship, such an undeveloped nation that suffered 100 percent emigration in the noted period will inevitably find itself competing with Haiti for the hemisphere’s most deprived nation.
In a recent High Court of Guyana decision, the judgment handed down on May 3, 2023, Justice Sandil Kissoon ruled that Exxon’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) is in breach of its permit which, in the court’s view, unreservedly calls for unlimited insurance protection in the event of an oil spill. Mr. Anil Nandlall, (Guyana’s Attorney General) in a statement said the government will appeal the judgment of the court and hopefully place a hold on the order to comply within 30 days. He further noted that the EPA (Environmental Protection Agency) and the Government of Guyana are of the considered view that the Environmental Permit imposes no obligation on Exxon’s affiliate to provide unlimited insurance coverage for oil spills. Vice President Mr. Bharrat Jagdeo also said it is incumbent on the courts to produce judgments that are well reasoned, adding that the EPA’s efforts on securing various forms of insurance in the oil sector should not be overlooked.
The Vice President said the regulatory body has been in discussions for over a year now with Exxon to secure a US$2B parent guarantee for the Stabroek Block.
He said those discussions concluded recently. Mr. Jagdeo said the foregoing therefore arms Guyana with three mechanisms that can be applied to cover the expenses associated with clean up, restoration and compensation for an oil spill. He also refuted claims or contentions that government should secure unlimited insurance coverage from Exxon. “What would be the premium for this unlimited insurance?” asked the official at his press conference. He said, “There is nothing like that in the world of insurance. You can have coverage but even then, there is a defined risk.” Based on the foregoing grounds, Mr. Jagdeo is of the belief that the recent High Court judgment is therefore flawed and must be appealed by the EPA.
He also expressed the view that the judiciary is treading in murky waters by directing a regulatory agency on how to do its job and setting a timeframe on when it should complete certain orders. In this regard, he was alluding to Justice Sandil Kissoon’s order urging EPA to issue a notice to EEPGL that it furnishes Guyana with unlimited insurance within 30 days or have its Liza One permit suspended. This is not a protracted possibility, it is what will take place if, God forbid, an oil spill were to occur on Guyanese oil producing platforms.